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Category: Trade & Industry

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  • FBR officials treat taxpayers as criminal using search powers

    FBR officials treat taxpayers as criminal using search powers

    KARACHI: Business community has resented the use of powers related to search by Inland Revenue officers and treating registered taxpayers as criminal.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 demanded amending such provisions to avoid such misuse of powers.

    The KCCI while highlighting provision Section 40 of Sales Tax Act, 1990, said that the officers of Inland Revenue at their discretion and opinion may obtain a warrant from the magistrate and conduct searches of the premises of registered persons at any time.

    The search made under sub-section (1) shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (V of 1898).

    The chamber said that the officials are treating registered persons as criminals.

    Powers to enter and search any place gives immense powers to officers of Inland Revenue. Such powers can be misused for harassment and extortion of tax payers.

    The law also does not define the “place” which can be search, therefore it may include homes and personal residences of tax payers.

    The chamber proposed that the provisions should be amended to prevent misuse.

    “No searches should be made without prior notice in writing to the registered person. No searches may be conducted outside the working hours and holidays or immediately prior to holidays.”

    The proposed amendment shall alleviate fears of the business persons and it will also encourage new tax-payers and curtail discretionary powers.

  • Garments exporters demand sales tax zero rating revival

    Garments exporters demand sales tax zero rating revival

    LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has demanded the tax authorities to reintroduce zero-rated sales tax regime.

    In its proposals for budget 2020/2021 submitted to Federal Board of Revenue (FBR), the PRGMEA demanded restoration of zero-rated regime of ‘no payment and no refund of sales tax’ for export-oriented sectors including textile at least for one year to sustain the industry amidst the severe liquidity crunch due to COVID-19.

    The government should release all stuck claims of the exporters, including DLTL, DDT, Customs Rebates and Sales Tax rebates, as the liquidity crunch is a major stumbling block in the way of improving exports.

    It said the apparel industry should be allowed to import fabric under the SRO 492 scheme, as the weaving industry of Pakistan is unable to fulfill demand for fashion wear, adding, the government should also announce complete 100 percent drawback rate of incentive at 7 percent without the condition of increment with simple procedure and paperless working for two years (2019-2020 and 2020-2021).

    Ijaz A. Khokhar, chief coordinator PRGMEA, in a statement said they had also suggested the government that incentive amount should be directly credited to the exporter’s account at the time of realisation of export proceeds and State Bank of Pakistan may subsequently claim the amount from the government.

    Moreover, Khokhar said the government should also extend the last date for submission of claims of duty drawback.

    The PRGMEA demanded a one-window operation so that the exporters could focus on the market research and marketing for their products, besides proposing that cotton yarn, the major raw material of apparel sector, should be exempted from all duties and taxes to encourage value-addition.

    One-window operation may effectively be introduced to replace the lengthy procedures that involve interaction of manufacturer with various agencies. At the moment, different government agencies have been harassing the textile industry virtually every day. Social Security, EOBI and all other taxes should be merged and deducted at source. The government exchequer will receive more revenue, if a reasonable percentage of realised amount is deducted. And many of the SMEs companies will add in the tax net automatically.

    The PRGMEA also urged the government that the custom duty of 7 percent on import of Polyester staple fibre including a range of 20 percent anti-dumping duty should be abolished to reduce the cost of production to compete in the market.

    It further said that exporters had received just 35 percent of claims payment only, while 65 percent of the refund claims were stuck with the government, which cumulated 12 percent of the exporters’ running capital; however, the profit margin of exporters was around five to eight percent.

    “Due to availability of liquidity and smooth cash flow, the confidence of exporters will be boosted to enhance their exports and cement their business ties with the foreign counterparts to capture true business potential,” it added. The government has given assurance to clear all pending claims, but the factual position is that more and more refund claims are piling up with the payment of just a small number of claims.

    PRGMEA asked the government should announce a clear policy to finally clear all the pending refund claims.

    The trade association also requested that import of fabric be allowed under SRO 492 instead of DTRE, which was very complicated and only 2 percent exporters could avail importation under DTRE facility, whereas 97 percent SME sector could be facilitated under SRO 492, which was enforced previously.

    To compete with Bangladesh and India; it is very important for Pakistan to offer the same products as they are exporting in large variety.

    It said the incentive amount should be directly credited to the exporter’s account at the time of realisation of export proceeds and SBP may subsequently claim the amount from the government. The condition of “after receipt” should be abolished and prompt payment shall be made. Otherwise, again backlog of payments to be made to exporters shall be created as previous payments of billions of rupees have not yet been made to the exporters.

    PRGMEA also proposed that since WEBOC system was available then why do exporters need to submit the hard copies for processing of rebate and DLTL claims. “As soon as the bank may report payment realisation on WEBOC, rebate and DLTL claims should be highlighted in Green and entitled for disbursement of refund,” they added.

  • OICCI suggests eliminating Sindh infrastructure cess

    OICCI suggests eliminating Sindh infrastructure cess

    The Overseas Investors Chamber of Commerce and Industry (OICCI) has made a fervent appeal to the Sindh government, imploring for the withdrawal of the Infrastructure Cess to alleviate the burden on the cost of doing business.

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  • Karachi Chamber seeks fair tax treatment for commercial importers

    Karachi Chamber seeks fair tax treatment for commercial importers

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has sought fair treatment on collection of withholding tax for commercial importers on import of industrial raw material.

    KCCI in its budget proposals submitted to the Federal Board of Revenue (FBR), said that under Section 148(1) of Income Tax Ordinance, 2001, 6 percent withholding income tax is levied on import of industrial raw materials, whereas manufacturers are exempt from such withholding tax at import stage under Section 159 read with Rule 72B (PART IV OF SECOND SCHDULE OF Income Tax Ordinance, 2001).

    The exemption has created disparity of 7 percent between commercial importers and manufacturers in total incidence of taxes (when 3 percent further tax are included).

    This anomaly has led to rampant misuse and evasion of taxes through over-import by manufacturers for trading purpose, fake registrations by commercial importers and corruption in tax offices for issuance of exemption certificates U/S 159 (1).

    The KCCI said that most of the commercial importers of Raw Materials have now registered as manufacturers to avoid high rate of WHT, 3 percent value addition tax and further tax of 3 percent.

    Nearly 90 percent of all industrial raw material is now imported under the category of manufacturers, while the industry also imports raw materials for trading.

    Loss of revenue is at over Rs.80 billion on total raw material import of Rs.3,250 billion in Pakistan.

    The KCCI proposed that the rate of withholding tax on import of raw materials should be equal for both commercial importers and manufacturers and fixed at 3percent on import stage.

    Further, exemption under Rule 72B (PART IV OF SECOND SCHDULE OF ITO) on raw materials imported by manufacturers should be withdrawn and disparity in WHT may be removed.

    The rate of withholding tax on commercial importers is very high and should be reduced to 1.5 percent to qualify as minimum tax as is the case for industry and large import houses.

    The chamber said that the measure will help broaden tax base, prevent misuse of exemption by fake registration as manufacturers.

    Besides, this will help in substantial Increase in revenue collection through rationalization.

    The KCCI said that the commercial importers of raw materials are a major support to SMEs and recover taxes on behalf of the government.

    Therefore, rationalization will revive the commercial import, support SMEs and prevent misuse of exemption.

  • KCCI proposes regularizing gold, jewellery sector

    KCCI proposes regularizing gold, jewellery sector

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has submitted proposals to tax authorities for regularizing gold and jewellery sector.

    In its proposals for budget 2020/2021, the KCCI said that gold and Jewelry sector has always been a neglected and largely unregulated sector.

    No clear policy on import of Gold and precious metals has been formulated while also the export of finished Jewelry has no incentives.

    There is a massive demand and consumption of gold, silver and gems in Pakistan and annual consumption of gold is estimated at 160.0 metric tons.

    The chamber said that the demand is met mostly by undocumented sector because the foreign exchange is not provided by State Bank of Pakistan for import of gold.

    Clause under Serial.No.16 of Part II of Import Policy Order 2016, which deals with import of Gold and Silver, stipulates the condition ‘Importable subject to the condition that importer shall arrange his own foreign exchange for the purpose’.

    But there is no provision under the Foreign Exchange Rules which provides the necessary procedure to allow the importers to arrange own foreign exchange and remit the same to the supplier.

    This has resulted in smuggling and undocumented trade in Gold, and a major sector which has immense potential for exports and revenue generation is suffering with rapid decline.

    Thousands of goldsmiths, artisans and workers have lost their jobs. This sector has the capacity to produce high quality gold ornaments and designer jewelry for export.

    The Karachi Chamber proposed that the sector can be a major employer and source of revenue if appropriate policy governing import of precious metals, documentation of sales and rational tax rates are implemented in consultation with stake holders.

    Import of Gold and Silver may be allowed against payment in foreign exchange arranged by importers through local market (exchange companies and banks). Necessary legislation may be promulgated to legalize the jewelry trade.

    It will help in curtailing smuggling of gold, silver and gems. Further, jewelry trade will be documented because if the import is legalized then the subsequent entities in supply chain will be documented.

    Besides, this will unleash the potential of a large sector to contribute in growth, employment of highly skilled workers and export of Jewelry.

  • Conditions for masks import should be relaxed: Khurram Ijaz

    Conditions for masks import should be relaxed: Khurram Ijaz

    KARACHI: Khurram Ijaz, Vice President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the authorities to relax conditions on import of face masks and facilitate masses considering the spread of coronavirus.

    In a statement issued on Friday, Ijaz urged Drug Regulatory Authority of Pakistan (DRAP) to take measures for early release of stuck-up face masks at the ports.

    Khurram Ijaz said that the cases of coronavirus was on the rise. This requires that all medical facilities including face masks should be available in huge quantity.

    He said that the procedures of clearance for face mask import should be made easy.

    The vice president said that due to lethargy of DRAP a huge quantity of face masks were stuck up at the ports and it would badly hurt the supply chain, especially in the wake of rising coronavirus cases.

    The delay in clearance will also increase prices of masks in the local market, he added.

    He urged the authorities to consider the urgency and take immediate measures for release of stuck up masks.

  • Regulatory duty must be rationalized to curb smuggling: Karachi Chamber

    Regulatory duty must be rationalized to curb smuggling: Karachi Chamber

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has urged tax authorities to rationalize the regulatory duty on imported goods in order to curb smuggling.

    In its proposals for budget 2020/2021, the KCCI said that the regulatory duty was imposed in last fiscal year to rectify the balance of payment crisis.

    To some extent the regulatory duty on imported food items supported the food items produced locally but most of those items which are not produced locally due to climate and resources, have to be imported.

    High rates of RD on imported food items has sharply increased cost of import and consequently these items have been pushed into smuggling regime.

    “Rampant smuggling of these items is taking place with impunity making it impossible to import through documented channels.”

    The KCCI  Major loss of revenue to exchequer because smuggling mafia makes everything available without paying any taxes and duties.

    Imposition of regulatory duty is the main cause that such commonly used items like dry-fruits, nutrition, honey, grains, pulses and spices are being imported through illegal channels which is causing significant damage to the economy of the country.

    The KCCI suggested that regulatory duties should be rationalized and in some cases withdrawn to curtail smuggling and help to increase in revenues, documentation of trade and support the exports as many of the imported items are industrial raw materials which are re-exported to generate foreign exchange for Pakistan.

  • KCCI wants end lockdown, deploy army for SOP enforcement

    KCCI wants end lockdown, deploy army for SOP enforcement

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Wednesday urged the government to lift lockdown completely and allow all type of businesses to restart their activities.

    Siraj Kassam Teli, Chairman Businessmen Group (BMG) and former KCCI president in a statement also advised the government to deploy troops from the army whose presence and patrolling at various commercial markets would ensure strict adherence to the Standard Operating Procedures (SOPs) devised to contain further spread of coronavirus pandemic.

    Teli said that Pakistan’s economy was already in deep crises and the country cannot afford further damages hence, it was really critical to restart all businesses with normal timings and get back to routine life in presence of the virus.

    “On one hand, we have to contain coronavirus pandemic but on the other, we also have to save the already ailing economy therefore, the patriotic and disciplined troops from armed forces must be given the task to ensure across the board implementation of SOPs, which has to be done on top priority in order to save the economy from plunging into further crises,” he said, adding that reopening of businesses under army’s supervision would help in protecting the businesses from complete collapse and save the masses from unemployment, poverty and starvation.

    Chairman BMG, while referring to numerous measures adopted by the Federal and Provincial governments since the imposition of lockdown from March 23, said that the federal government and all provincial governments strived really hard to deal with COVID-19 pandemic and they all deserve to be appreciated but unfortunately, the number of people affected by coronavirus continues to rise all over the country as the public and also the members of the business community have been largely ignoring the SOPs due to lack of discipline.

    “Pakistan army is well-known for its discipline all around the world hence, it is high time that the army must come forward to rescue the country, teach discipline to the masses and get the SOPs enforced all the time which is the only way to save our beloved motherland from further disaster,” he added.

    He stressed that the coronavirus pandemic is not going anywhere and we have to live with it and continue our businesses in a disciplined manner.

    “We cannot live in the lockdown forever so we have to exhibit the Discipline which is the first step on the road to success.”

    He cautioned that if the lockdown is not suspended immediately, many businesses, which remain completely suspended since last more than two months, would shut down forever that would lead to creating a chaotic situation as the people would find no other option but to come out on streets to protest due to rising unemployment and poverty.

  • Manufacturers demand domestic supplies against FE should be treated as exports

    Manufacturers demand domestic supplies against FE should be treated as exports

    KARACHI: Manufacturers have urged the government to treat goods booked abroad on which foreign exchange (FE) has been transferred should be treated as export.

    Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its proposals for budget 2020/2021, said that some manufacturers (like Dawlance etc.) are demanding that overseas Pakistanis may be allowed to send foreign exchange to manufacturers through banking channel for delivery of goods to their blood relations / relatives in Pakistan, which may be treated as export.

    Some stores outside Pakistan have contacted the manufacturers for delivery of goods in Pakistan. These stores in foreign countries will make consolidated payment in FE through banking channel to manufacturers in Pakistan.

    They have requested the manufacturers in Pakistan to send samples for booking of orders. The issue is that after payment of duty and taxes the goods made in

    Pakistan become more expensive.

    The Pakistanis expatriates abroad then prefers to purchase smuggled goods from the open market or send goods in baggage (better quality and less cost) declaring it as old and used goods after removing its packing etc.

    Store owners abroad have shown keen interest in booking Pakistani manufactured goods to be delivered in Pakistan.

    “It is, therefore, proposed that such goods, where orders are booked from abroad and foreign exchange is sent in Pakistan through banking channels, may be treated as exported goods and may be exempted from local duty and taxes or partial exemption may be given in the form of fixed duty drawback / rebate of tax to be notified.”

  • Sindh urged to bring down sales tax rate at 10 percent

    Sindh urged to bring down sales tax rate at 10 percent

    KARACHI: Sindh Revenue Board (SRB) has been suggested to bring down sales tax on services rate to 10 percent from existing 13 percent to encourage registration of more taxpayers.

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